Thank you for the opportunity to address members of the NZ Fiji Business Council today.

Last year two-way trade between New Zealand and Fiji totalled $434 million, with

New Zealand exports to Fiji accounting for $363 million, and imports from Fiji worth $71 million.

While these figures provide evidence of a substantial trading relationship between the two countries, there can be no disguising the fact that this trading relationship is smaller and growing more slowly than it could, and should, be.

Neither should we attempt to disguise the fact that the sub-optimal character of the trading relationship is in part the result of the 2006 coup in Fiji; international reaction to that coup, and the consequent decline of the Fiji economy.

Investors and traders have a very strong preference for employing their resources in countries where governments are stable; laws and regulations are certain and fair; the judiciary is independent, and where normal diplomatic relationships are available as a backstop to assist in the resolution of serious issues.

Sadly, none of these attributes could be said to be features of the Republic of Fiji in 2009.

Before I deal with the issues associated with the growth of trade in the Pacific generally, I want to deal directly with the question of New Zealand's relations with Fiji.

I am well aware of the fact that there are some who are engaged in trade with Fiji - no doubt some here today - who are critical of the Government's stance on, and sanctions against, that country.

Periodically I receive correspondence suggesting that New Zealand should be indifferent to such matters as military coups, the sacking of judges, the abrogation of the constitution, the suspension of personal freedoms, the arrest and intimidation of leaders of the Methodist church, and heavy-handed censorship of the media.

I could not disagree more strongly with those sentiments.

Were those to become the accepted standards, then I suggest we would find this a significantly more challenging world to live in.

New Zealand, as a small nation, more dependent than most upon strong, honest international organisations and clear principled rules of behaviour, would have most to lose.

And the small, vulnerable nations of the Pacific region would the easiest targets for dictators in waiting, and those who would benefit from their actions.

Today I want to be very clear about the Government's position on Fiji.

First, New Zealand has no trade and economic sanctions against Fiji.

That decision was made by the previous government, and endorsed by the current government because such sanctions would simply cause greater harm to innocent people in Fiji whose interests are already being damaged by the actions of their own government.

I have said publicly on more than one occasion that for the New Zealand Government to seek to interfere with the freedom of New Zealanders to travel to or trade with Fiji would make us little better than the military regime in that country.

Second, the sanctions we do have are tightly targeted at members of the regime and their immediate families.

The level of vitriol I hear expressed against those sanctions tells me that they are highly effective, and while I have sympathy with the argument that it is tough for younger Fijians whose parents are part of the regime to be subject to the travel ban, that is an essential element in its effectiveness.

Third, we have a ban in place on sporting contact with Fiji - a policy we inherited from the previous government.

The ban does not apply to international sporting events hosted in New Zealand where the New Zealand host sporting body is contractually required to provide for participation of all international teams.

That means, for example, it does not apply to the Wellington Sevens.

In practice, however, the Minister of Immigration and I, who are the two decision-makers in this area, have been extremely liberal in providing exceptions to the ban since the current Government has been in office.

We have taken this approach because, again, we have wanted to avoid punishing innocent, and generally young, Fijian nationals who carry no responsibility for the actions of their government.

Finally, we have, in concert with our partners and neighbours, taken a firm view that Fiji should be suspended from the Pacific Forum and the Commonwealth until such time as we see credible, genuine steps to move Fiji back towards the holding of free elections, the rule of law, and respect for human rights.

That is an entirely appropriate position.

A commitment to the rule of law, human rights, and democracy are the essential principles that underpin both the Commonwealth and the Pacific Forum - the glue that holds those organisations together.

In a real world in which nations, from time to time, see government's thrown out of office by force, both the Commonwealth and the Forum have reasonably flexible procedures that allow time for them to demonstrate progress back towards democracy and the rule of law.

Had the Commodore been prepared to follow through with his commitment to Pacific Leaders to hold elections this year, Fiji would still be an active member of both the Commonwealth and the Pacific Forum.

As is the case with many other clubs and organisations, if you don't show respect for the rules, others eventually decide that you no longer qualify to be a member of the club.

Both the Prime Minister and I have played our respective parts in Fiji's suspension from the Forum and the Commonwealth in sorrow, rather than in anger, but I can assure you that neither us has been in any doubt as to the course we were obliged to follow.

The effects of all of the above on the Fiji economy have, of course, been highly negative.

Fiji's own official figures showed their economy contracting by 6.6 per cent in the year following the coup.

The spiral continues downward with the Asia Development Bank in August predicting a further one per cent contraction in the next year. 

It is clear to New Zealand, to Australia, and to many of the international financial institutions that at some point significant resources will be required to assist in re-building the Fiji economy.

That will be important not just to the economy of Fiji, but also to the wider Pacific region of which the Fiji economy is such an important part.

We stand ready, as do others, to commit those resources when circumstance permit.

The visit by Sir Paul Reeves as special envoy for the Secretary General of the Commonwealth last week suggests that this eventuality will not arise any time soon.

As I have said many times publicly over recent months, we simply need to be patient.

We cannot force Fiji to embrace democracy, and nor can we stop the Fiji regime wrecking their own economy, as it increasingly appears they are intent upon doing.

Some have argued that the policies being pursued by New Zealand have simply handed economic opportunities to countries like China.

But China is a rising superpower with an interest in acquiring markets and resources in this region.

With or without a coup, China would be a strong player in the region, and a strong competitor in our markets.

Associated with that growing status has been an understanding of the obligations and restraints of being an important global player.

And I am convinced that there is now generally an understanding among those who do business with Fiji of the risks of getting too close to a regime that can be unpredictable and whose behaviour can be counter-productive.

I'd like to turn now briefly to the rest of the Pacific.

There are challenges in the Pacific, not least the immediate threat of the global economic crisis, as well as long-term fragilities within Pacific island countries, and weakness in the regional responses to those issues.

These issues have been top of my agenda during my visits to the region, and it's very clear that Pacific island countries welcome New Zealand's commitment to working with them to address their concerns and to support policies aimed at delivering sustainable economic development.

Before becoming Foreign Minister, it was my view that New Zealand must accept a significantly greater role providing leadership, support, and friendship to the nations in the Pacific, whose citizens are linked through migration and family ties to New Zealand.

This remains my view now.  We have some special obligations in the Pacific, and also a unique capacity to make a difference.

In line with this desire, this Government has made changes in the focus of New Zealand's Overseas Development Programme, which I have spoken about elsewhere.

The reintegration of NZAID into the Ministry of Foreign Affairs and Trade will achieve greater alignment between the objective of our development assistance and our overall foreign policy goals.

Essentially, our aid strategy needs to reverse the negative trends that we see in our region.

Our aid dollars have done little to build sustainable economies providing employment prospects and the promise of a brighter future.

With finite resources available to us, we need to make choices that will result in long term economic sustainability for our aid recipients - a hand up, not a hand out.

In the case of Fiji, this is of course difficult, but we maintain a $5 million annual development programme aimed at assisting the least well off in Fiji, particularly those in squatter settlements.

We were also one of the first to offer assistance following the flooding earlier this year - an additional $3.6 million to help Fiji repair infrastructure damage.  This process is ongoing.

We see improving transport infrastructure within the region as a key element in developing trade and tourism.

In line with that, we agreed to provide financial assistance to underwrite losses on key air routes in the region to ensure they stay open and continue to generate tourism and export revenues.

We have also decided to transfer the role of managing New Zealand's shareholding in the Pacific Forum Line to the Minister and Ministry of Foreign Affairs, so that it can be managed alongside the range of similar interests which affect the development of trade and tourism within the region.

As you know, Fiji serves as something of a hub for the Line's services.

Wider than this, New Zealand and Australia are working with Pacific island countries to build the right kind of national and regional arrangements that will help them expand and add value to their internal and export marketing efforts.

The recently launched negotiations on PACER-Plus will be the framework that will underpin the future development of trade across the region.

PACER-Plus envisages much closer trade agreements between Australia, New Zealand, and Pacific island countries.

As we have made clear, however, this will not be a typical WTO-style Free Trade Agreement.

Australia and New Zealand have committed to ensuring that PACER-Plus will complement our ODA efforts to bring about sustainable economic growth in the Pacific, by assisting Pacific Island countries to capitalise trading opportunities to fuel their economies.

Resources will be made available to ensure that Pacific Island nations have the ability to participate fully and effectively in those negotiations.

New Zealand's vision for PACER-Plus is an agreement that will equip the Pacific to better withstand external shocks, to increase jobs and export capability, and address the trade imbalance that currently exists between the region and New Zealand.

Last year, New Zealand's trade with the region was worth over a billion dollars.  What we want now is to see the Pacific producing and trading more successfully with New Zealand, Australia, and other trading partners.

Fiji will be kept informed of this process as it develops with the aim of seeing it join once it decides to resume normal relations with the region.

Elsewhere in the Pacific, we will be looking for the business community, including business councils like this, to lend their vocal support to the agreement, and to contribute to work on PACER-Plus as negotiations commence.

As business leaders you have a network of connections and a practical understanding of the region. 

In the case of Fiji, you are uniquely positioned to maintain dialogue with Fiji to ensure the trading relationship remains vibrant and strong.

This government will work with you to help you do this.

Unlike others, though, this Council also has a pressing duty to ensure that its contacts in Fiji are under no illusions about the very real economic consequences of the route Commodore Bainimarama and his supporters are leading Fiji down.

I recognise that this is difficult, but maintaining open and honest channels of communication with the region at government and business levels will be the only way that those in Fiji are supported and kept informed.

It will be the only way that Fiji will eventually return to its rightful place as an economic driver in the region.

Thank you.